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Giant Eagle's new prototypes aim at upscale competitors.

June 27, 2006, 08:00 pm

PITTSBURGH, Penn. -- A cooking demonstration section staffed by chefs, a specialty bottled drink area, sushi counter with seating, free Wi-Fi connections and black shopping carts with accessories are all features of Giant Eagle's two new prototype stores in Bethel Park and Shadyside, according to a Pittsburgh Post-Gazette report.

These prototypes are meant to create a gathering place for those who love food. "Discover the oooo in food,'' says the new slogan over the door of the Bethel Park store.

During the months of remodeling at the new Giant Eagle stores, shoppers have seen the new Churrasco section selling foods prepared in a traditional Brazilian style, the kosher deli with its own kitchen designed with help from rabbis, and the candy store carrying imported Leonidas chocolates from Belgium, the report said.

The planning for the prototype stores goes back two years as the $6 billion O'Hara-based grocer, confronting creeping competition from trendy new stores entering the market, has been tinkering with ideas and seeking out new products to create a store that would have its own name -- Market District -- and look very different from the average Giant Eagle.

If it works, Market District eventually could be the calling card Giant Eagle now lacks, something that would create fans the way that a store from Rochester, N.Y.-based Wegmans does or the way the announcement that upscale discounter Trader Joe's is coming to Pittsburgh sends a thrill through certain circles, according to the report.

"We wanted to give Giant Eagle an opportunity to be able to move into markets that we didn't have a commanding presence in," Sandy Glatter, director of product development, told the Pittsburgh Post-Gazette. Consumers in Cincinnati or Detroit, where Giant Eagle has some stores, might not see the difference between a Kroger and a regular Giant Eagle, but they may well be attracted to a Market District and give it a try.

Even its home market, where trade publications estimate the private company already controls as much as half of the Pittsburgh's region grocery dollar, aided by its recent foray into the convenience store business with GetGo and a timely gas discount program, Giant Eagle would like more -- or, at the least, to protect its turf.

Competition is intensifying both in the region and nationally as Wal-Mart, Aldi, Save-A-Lot, Target and even dollar stores grab a growing share of the grocery business. And not only are traditional supermarkets being pinched as discounters take away low-end purchases, specialty stores such as Whole Foods Markets and Trader Joe's are siphoning off customers who desire certain items and in some cases are willing to pay more for or go out of their way to get them, the newspaper reported.

As for merchandising, executives have devoted themselves to bringing in finds such as Papyrus stationery and Tulocay's marinades, neither of which is usually sold in supermarkets. Organic produce is sold with the rest of the produce, not separated.

The company has made a huge capital commitment to create the two Market District locations that Burt P. Flickinger III, managing director of the Strategic Resource Group, a New York-based consulting firm, described as beautiful and extremely well merchandised. In both cases, existing stores were expanded and remodeled.

The Centre Avenue store in Shadyside is very urban, with apartments on top and a garage with an elevator big enough for shopping carts below. The Village Square store on Oxford Drive is a sprawling suburban location, the report said.

"They've continued to research and ... borrow and build from competitors," said Flickinger. The combination of ideas -- both old, new and borrowed -- may be enough to persuade consumers to go out of their way, he said.

The new stores will not be in every neighborhood the way Giant Eagle locations are. Pittsburgh might be able to support only three or four, according to Kevin Srigley, Market District senior vice president.

If some offerings seem familiar from the fancier Giant Eagle locations in town, officials said that's because there will be overlap. Market District prices on basic goods will match Giant Eagle circulars. The division wouldn't have the resources to buy some of its products without the larger organization.

More than a few of the special offerings that will excite Food Network fans will not be cheap. Some of those Leonidas candies were listed at $29.99 a pound and a family interested in picking up dinner on the way home could pay $14 a pound for ready-to-serve Cedar Plank Salmon or $21 a pound for Tea-Smoked Tenderloin.

On the other hand, trying a bottle of Tommy Knocker Almond Creme soda will run 99 cents. The checkout stations will offer Coke and Pepsi, but there also will be bottles of Orangina for an impulse buy.

The team has taken a different approach to staffing, said Srigley. Students from the area's culinary schools are being recruited to help in the demonstration area. A visual merchandiser who used to work for the Limited clothing stores has been hired to add pop to the Market District look. Training employees to understand the unusual products they're selling hasn't been cheap, he told the Pittsburgh Post-Gazette.

A year from now, the stores may look different because the experimentation is expected to continue. It likely will take several months of analyzing sales and data from Advantage cards before officials decide whether to add a third Market District.

"We're focused right now on making the first and second successful," Srigley said.